Developer seeks $660m to overhaul landmark

In 1930-31, it cost $40.9 million to build the Empire State Building, including buying the land. (RICK MAIMAN/BLOOMBERG NEWS/FILE 2002)

WASHINGTON - Developer Peter Malkin is seeking to finance a $660 million renovation of the Empire State Building to lure large firms to New York City's tallest skyscraper, a haven for small businesses for decades.

Wien & Malkin LLC, a New York-based real estate company, is asking investors in Empire State Building Associates LLC to approve borrowing to pay for modernizing the iconic 1930s office tower.

The project will exponentially increase the building's debt - a $61 million first mortgage - at a time when many lenders are reluctant to finance commercial real estate projects. Raising the financing shouldn't be a problem, industry analysts said, as the total borrowings would still be less than half of the building's value, estimated at more than $2 billion.

"When you get a trophy property like that with a very low loan-to-value ratio, there would be a lot of lenders that would be comfortable" providing the cash, said Cedrik Lachance, an analyst at Green Street Advisors, a California firm.

The new loan would leave the property with debt ranging from $660 million to almost $825 million, according to Bloomberg calculations based on documents filed with the Securities and Exchange Commission and interviews with real estate analysts.

The building had fallen on hard times in recent years, in part because of poor management and in part because it was in a section of Manhattan that was a less desirable market for office space, said Robert Sammons, research director at Colliers ABR Inc., a New York-based real estate broker. Now the area is more in demand.

Thomas Keltner, general counsel at Wien & Malkin, declined to comment.

Malkin is improving the building's infrastructure and amenities, creating larger office spaces, and raising rents as part of a new leasing strategy for the landmark, located at 350 Fifth Ave. The goal is to bring in larger, more creditworthy tenants to the 102-story building, which was occupied by almost 700 businesses and firms at the end of 2006, according to SEC filings.